Regulator gives cautious welcome to water charges in Cambridge

THE Consumer Council for Water gave a cautious welcome to the regulator, Ofwat's, decision on how much Cambridge Water can charge its customers over the next five years.

Ofwat has said that Cambridge Water should keep average prices relatively steady until 2015. This would mean that the company's average annual water bill will rise one per cent from £114 in 2010 to £116 by 2015, before taking inflation into account. During the summer, Ofwat announced its draft proposals on how much the company might be able to charge customers over the next five years, indicating that it should reduce average annual water bills by £11. 1

Sir James Perowne, Chair of the Consumer Council for Water Central and Eastern Committee, said: "We are disappointed that Ofwat suggested the possibility of reduced prices for Cambridge Water customers in July, and now is allowing the company to raise prices, albeit slightly. Over the summer, when Ofwat announced its draft proposal on how much the company might be able to charge customers until 2015, more than eight out of 10 Cambridge Water customers told us that they could accept the prices being suggested.

"However, customers did not want lower prices to mean a reduction in service, and at first sight, the package of investment that Cambridge Water customers will be getting for their money is an improvement from Ofwat's draft proposal.

"Customers tell us that ensuring a safe, reliable water supply is one of their top priorities, and that paying a small amount now to ensure a sustainable supply in the future would be worth the money. We are pleased that Ofwat allowed the water company more investment in this area over the next five years, but we know that these investments alone could have been made without a significant impact on customers' bills.

"In its draft proposal, Ofwat was putting pressure on Cambridge Water to be more efficient, but the regulator has since changed its mind. Sending varying messages on price is not fair to customers and they will not welcome the idea of paying more than the regulator's initial estimate.

"Customers should keep in mind that the prices being announced today might not be what they see on their bills by 2015. These are average prices, so changes in water bills will vary from customer to customer, depending on their circumstances. For example, there will be variations between metered and un-metered customers' bills.

"There is also a risk that things could crop up over the next five years which might add costs on to customers' bills; for example, work needed to meet new environmental targets."

Water companies can appeal to the Competition Commission if they are not happy with Ofwat's final decision and the Consumer Council for Water will strongly represent water consumers throughout this process.